Indian Ec onomy

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Part 1: His toric al Ove rvie w

Pre -LPG
Inward looking economy Shortage & premiums / sellers market / monopoly Conserve forex / import substitution Huge trade deficit 91 forex reserves U.S.$1 bn

Firs t Ge ne ration Re forms

Delicensing / import liberalization Taxation reform direct & indirect Relaxed forex norms Allowed FII & FDI

Dividend repatriation
Stock Exchange reforms SEBI Banking sector reforms Private banks allowed Reforms process slow but cautious

Se c ond Ge ne ration Re forms

Infrastructure building roads, airports via PPP

Telecom reforms allowing private

players in basic & cellular telephony

Insurance GIC & LIC; private players Labour law reforms Hire & Fire Disinvestment & Privatization Getting out of the business of Business Power sector reforms

Part 2: Vital Statis tic s

Population Population growth rate GDP (nominal) GDP (PPP) GDP growth rate Per capita income Forex Reserves Labour Force Unemployment rate BPL Population (less than $1 day)

121 crore 1.37% (2010 est) $1.82 trillion Global Rank 10 $4.47 trillion Global Rank 3 6.5% in 2011-12 $1514 (2011 est) $296 billion (Dec 2012) 478 million 9.4% (est 2011) 32.7% (2011)

India : Bas icFe ature s

Low per capita income/High population Dependence on agri/High rural pop High density of population 382/sq km High rate of unemployment Unequal distribution of wealth widening gap between have and havenots

India : Bas icFe ature s

Still high rate of illiteracy Low 2011 HDI rank 134 Low level of technology and productivity Widespread poverty ; nearly 65% earn less than US$2 per day 46% of children suffer from malnutrition High savings and low capital formation

Part 3: Se c tor-w is eAnalys is

3 Se c tors of Ec onomy
Primary agriculture, forestry, fishery,
animal husbandry, horticulture

Secondary mineral, power, mining,

manufacturing industries

Services transport, trade,

communication, banking, other services

Indian Ec onomy Today

Agriculture: 2nd in the world in farm output Manufacturing: 14th in the world in industrial output Services: 15th in the world in output

Dis tribution of Workforc e

GDP - Se c tor Compos ition

Stre ngths
Huge arable land area (worlds second largest) Diverse soil types, climate Huge labour force Government focus, subsidies Largest producer of jute, milk, pulses Largest buffalo livestock Second largest producer of tea, wheat, rice, fish, vegetables, groundnuts

We akne s s e s
Fragmented land holdings
59% of holdings are marginal (<1 hectare) 21% of holdings are small (12 hectare)

Low productivity
Average yield is 2890 kg per hectare which is much lower than China, Japan

Monsoon dependence - 60% arable land without

irrigation Financing at usurious rates by local moneylenders Low remuneration to farmer from middleman

We akne s s e s
Landless labour

Seasonal unemployment - high degree

of disguised unemployment Electricity Roads and transport Farm mechanization Low awareness about improved methods/ products

Poor infrastructure

Illiteracy

Opportunitie s
Horticulture Organic Farming Fisheries Packaged/processed farm products Productivity improvements Use of IT/Communications

Indus trial Se c tor Ove rvie w

Eight Core Industries grew by 2.8% in April-Aug 2012 Size: <20% of Chinese industry Huge unorganized sector Effective corporate tax rate of 35% FII, FDI, SEZ

Main Indus trie s

Textile (largest employer, 4% GDP) Synthetic fibers Mineral products/chemicals Automobiles + components Cement/machinery and equipment

Stre ngths
Huge, low-cost labour force Educated, skilled workforce English language skills Good managerial skills Variety of raw materials available Strong economy & stable polity

We akne s s e s
Lack of infrastructure High cost of utilities like power Red tape Number of days it takes to start a business in India is 88! Cascading effect of indirect taxes High cost of finance Tardy judicial system

Opportunitie s
Drugs & Pharmaceuticals Textiles Transport Biotechnology Automobiles + Components Engineering goods

Se rvic e sSe c tor Ove rvie w

High growth rate over 11% Growth - not sector specific Concentration in urban areas India ranks 12th in commercial services exports

Ke y Se c tors
Hotels + Tourism Trade + Transport Communication Financial / Insurance / Banking / Real Estate IT & ITeS Social + Personal Services

Stre ngths
Huge educated labour force Low labour cost: only 14% of U.S. labour cost Factor cost advantage for foreign companies Less capital intensive than manufacturing Inherent advantages in tourism, health industries

We akne s s e s
High attrition rates in IT and BPO industry Lack of world-class infrastructure Dearth of highly-skilled labour Low investment in R&D and higher education

Opportunitie s
Health + Medical Tourism Hospitality Off-shore consultancy Retail KPOs

Part 4: India and the World

Fore ign Tradein 2011-12

Item Exports Imports Trade Deficit In U.S.$ Billion 303 488 185

Fore ign Tradein 2012-13

(Targe te d)

Item Exports Imports Trade Deficit

In U.S.$ Billion

360 564 204

Top 5 Import Partne rs FY12

Country China UAE Switzerland Saudi Arabia U.S. Value in U.S.$Bn Total Imports 58 36 32 31 23

Top 5 Export Partne rs FY12

Country
Value in U.S. $Bn Total Exports

UAE U.S. China (incl Hong Kong) Singapore Netherlands

36 34.7 31 (18+ 13) 17 9

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